Procedures for a directors’ meetings 1. Directors can take legally binding action in two ways a. unanimous written consent (DGCL 141(f), NYBCL 708(b) b. board meeting 2. Two types of meetings a. Regular- the one which occurs at regular interval. The frequency for regular meetings is generally specified in the bylaws b. Special- all other meetings are considered special 3. Notice a. The main distinction btw regular and special meetings is that a special meeting must normally be preceded by notice to the board members, whereas this is not necessary for a regular meeting 4. Quorum a. you need a quorum (the point is to get everyone’s input and representative of the board itself) and the requisite vote
b. default rule in NY and DE majority of the entire authorized board w/o regard to any vacancies (in person or on the phone) c. it is possible to have a lesser or greater (super-majority) quorum requirement (DGCL 141(b) and NYBCL 707) XVII. Electing Directors A. As a general rule, directors are elected by plurality vote ( DGCL § 216(3) , NYBCL § 614(a) ). 1. Preferred stockholders don’t get to vote, nor do holders of “nonvoting stock.” B. straight voting 1. shareholders get to cast up to the number of their shares for each of as many candidates are running C. Cumulative voting 1. Entitles a shareholder to cumulate or aggregate his votes in favor of fewer candidates than there are slots available, including in the extreme case aggregating all of his votes for just one candidate. XVIII. Action by Officers A. The majority rule is that the president has apparent authority to bind his company to contracts in the usual and regular course of business, but not to contracts of an “extraordinary nature.” B. To determine what constitutes an “extraordinary” action, take into account; 1. the economic magnitude of the action in relation to corporate assets/earnings, 2. the extent of risk involved, 3. the time span of the action’s effect, and 4. the cost of reversing the action. C. Of course, actual authority may be found in the articles, by-laws XIX. Action by Shareholders A. Shareholders must have a quorum present and the requisite legal vote in order to take legally binding action. B. Quorum 1. Under DGCL § 216(i) and NYBCL § 608 , the charter or by-laws can specify a quorum, but the default rule is a majority of shares entitled to vote at the meeting. 2. The charter or by-laws can raise the threshold or lower it to one- third of the shares entitled to vote. C. Voting 1. The default rule in both NY and DE is that approval requires a majority vote. D. Delaware 1. Default vote requirement- you need a majority of shareholders represented at meeting where quorum is present (DGCL 216(ii)) 2. Abstentions a. It counts for quorum requirements b. Abstentions count as NO! 3. Proxy Voting a. DGCL 212- a proxy will last three years if there is no date on it
b. DGCL 212(e) Irrevocable proxy 1. State on the face that it is irrevocable and can only be given to certain group of people (“proxy must be coupled with interest”) E. New York 1. Default voting requirement (NYBCL 614(b))- you need a majority
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